Here is What Hedge Funds Think About Carnival Corporation (CCL)

In this article we are going to use hedge fund sentiment as a tool and determine whether Carnival Corporation (NYSE:CCL) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Carnival Corporation (NYSE:CCL) a buy here? Investors who are in the know were turning bullish. The number of bullish hedge fund positions advanced by 5 in recent months. Carnival Corporation (NYSE:CCL) was in 36 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 53. Our calculations also showed that CCL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 31 hedge funds in our database with CCL positions at the end of the second quarter.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a glance at the key hedge fund action encompassing Carnival Corporation (NYSE:CCL).

Do Hedge Funds Think CCL Is A Good Stock To Buy Now?

At Q3’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 37 hedge funds with a bullish position in CCL a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is CCL A Good Stock To Buy?

Among these funds, Citadel Investment Group held the most valuable stake in Carnival Corporation (NYSE:CCL), which was worth $196.5 million at the end of the third quarter. On the second spot was Rokos Capital Management which amassed $140.1 million worth of shares. D E Shaw, Candlestick Capital Management, and Alkeon Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Covalent Capital Partners allocated the biggest weight to Carnival Corporation (NYSE:CCL), around 4.88% of its 13F portfolio. Prentice Capital Management is also relatively very bullish on the stock, designating 4.29 percent of its 13F equity portfolio to CCL.

As one would reasonably expect, key hedge funds were breaking ground themselves. Candlestick Capital Management, managed by Jack Woodruff, initiated the largest call position in Carnival Corporation (NYSE:CCL). Candlestick Capital Management had $62.5 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $22.9 million investment in the stock during the quarter. The following funds were also among the new CCL investors: Alexander Mitchell’s Scopus Asset Management, Jinghua Yan’s TwinBeech Capital, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Carnival Corporation (NYSE:CCL) but similarly valued. These stocks are Nucor Corporation (NYSE:NUE), Valero Energy Corporation (NYSE:VLO), Orange SA (NYSE:ORAN), Tyson Foods, Inc. (NYSE:TSN), AMETEK, Inc. (NYSE:AME), Genmab A/S (NASDAQ:GMAB), and Stanley Black & Decker, Inc. (NYSE:SWK). This group of stocks’ market valuations match CCL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NUE 25 199344 -7
VLO 32 289108 -6
ORAN 3 20523 0
TSN 33 865195 0
AME 38 1320239 0
GMAB 9 122715 0
SWK 37 776002 -7
Average 25.3 513304 -2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $513 million. That figure was $521 million in CCL’s case. AMETEK, Inc. (NYSE:AME) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. Carnival Corporation (NYSE:CCL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CCL is 77.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately CCL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CCL were disappointed as the stock returned -29.5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.